Consignment transfer exemption upheld where documents proved agency movement and no wilful suppression justified penalty.

A consignment transfer supported by form F and other records was treated as exempt under section 6-A of the Central Sales Tax Act, because the movement of goods to out-of-State agents was proved and the later revision could not recharacterise the same transaction as a direct inter-State sale merely due to advance payments. Penalty under section 16(2) of the Tamil Nadu General Sales Tax Act, read with section 9(2A) of the Central Sales Tax Act, was also found unsustainable because the turnover had been disclosed, the exemption had originally been accepted, and there was no wilful suppression or escaped turnover. The original exemption was restored and the penalty order set aside.

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Issues: (i) Whether the turnover was liable to be assessed as a direct inter-State sale or was protected as a consignment transfer exempt under section 6-A of the Central Sales Tax Act, 1956. (ii) Whether penalty was leviable for alleged suppression of turnover under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 read with section 9(2A) of the Central Sales Tax Act, 1956.

Issue (i): Whether the turnover was liable to be assessed as a direct inter-State sale or was protected as a consignment transfer exempt under section 6-A of the Central Sales Tax Act, 1956.

Analysis: The petitioner had produced supporting documents including the statutory declaration in form F and other records to substantiate the claim of movement of goods to agents outside the State on consignment basis. The original assessing authority accepted the documents and granted exemption. On the facts, the later revision of the assessment was found to rest on an impermissible reappraisal of the same transaction without legal basis, and the mere receipt of advance amounts from agents did not alter the character of the agency transaction into a direct sale.

Conclusion: The turnover was held to be a consignment transfer and not a direct inter-State sale, and the exemption claim was allowed.

Issue (ii): Whether penalty was leviable for alleged suppression of turnover under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 read with section 9(2A) of the Central Sales Tax Act, 1956.

Analysis: Penalty under section 16(2) was held to depend upon wilful and deliberate suppression or omission of turnover leading to escaped assessment. Here, the turnover had been disclosed in the returns, the exemption had originally been accepted, and the later revision was only a reassessment of the previously exempted turnover. Since the case did not involve escaped turnover arising from suppression, the precondition for penalty was absent.

Conclusion: No penalty was leviable, and the penalty order was set aside.

Final Conclusion: The assessment revision and the consequential penalty were unsustainable, and the original assessment granting exemption was restored.

Ratio Decidendi: Where an assessee substantiates a consignment transfer with supporting documents and the transaction was originally accepted as exempt, a later change of view cannot convert it into a taxable sale or justify penalty in the absence of wilful suppression or escaped turnover.

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